The Commissioner has been asked to review the estimated useful life and depreciation rate applicable to specialised buildings and plant used to grow mushrooms on a commercial basis. These assets consist of composting buildings (that may include bunkers that are contained within the building); phase 2 pasteurisation buildings (that may include separate mushroom spawning tunnels that are contained within the building), and growing buildings (that may include separate mushroom growing tunnels that are contained within the building), and are constructed predominantly of structural insulated panels ("SIP"). Non-SIP areas are usually constructed with concrete walls and floors, cement panel and colour steel or similar material.

The Commissioner accepts that these specialised, mushroom growing buildings and plant are exposed to a wet, humid and corrosive environment due to the material that is used in growing mushrooms and the environment that mushrooms need to grow successfully.

For these reasons the Commissioner is satisfied that the estimated useful life ("EUL") of these specialised buildings and plant (mushroom spawning tunnels and mushroom growing tunnels, when in books separately from building cost) is 33.3 years and has set a provisional depreciation rate for these assets accordingly. It needs to be noted that Bunkers (concrete) are already included in the Building and structures asset category, with a EUL of 20 years, and may be used by owners of bunkers used in mushroom growing.

Whether bunkers, spawning and growing tunnels are items of plant that are merely contained within a building or part of the building itself will be a question of fact. In deciding how these items should be categorised it is necessary to consider the degree of affixation and integration these items have with the building.

It also needs to be noted that these rates of depreciation do not apply to those buildings that are not directly involved in the mushroom growing process. These buildings (such as staff facilities, workshops and office areas) are not directly affected by the harsh conditions experienced in the specialised buildings and the estimated useful life will remain at 50 years.

Similarly, buildings with an estimated useful life of 50 years that are converted from some other use to mushroom growing cannot be subject to this determination. This change in use may have enabled the owner to apply for a special depreciation determination, on the basis that the change of use of the building has affected the buildings estimated useful life. However, with effect from the 2011/12 income year section EE 35(2) of the Income Tax Act 2007 states that the Commissioner is not able to set a special rate of depreciation for buildings. However, if the owner places the specialised plant subject to this determination (bunkers, spawning and growing tunnels) inside an existing building envelope, these items of plant may be depreciated using these new rates.